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Brazil's Economy Just Imploded
China may have mastered the art of fabricating economic data to a level unmatched by anyone except the US Department of Labor, but its derivative countries have much to learn. And none other more so than one of China's favorite sources of commodities over the past decade: Brazil. It is here that things are going from worse to catastrophic, as disclosed in today's update of Brazil's fiscal picture.
Here are the disturbing facts showing that behind the world's propaganda growth facade, it is all hollow: Brazil's consolidated public sector primary fiscal balance, which posted a significantly worse than expected R$8.1bn primary deficit in November driven by the R$6.7bn deficit of the Central Government, dipped into negative territory: -0.18% of GDP, driven by the significant deterioration of the Central Government finances.
This is the worst fiscal outturn since November 1998. Furthermore, the primary surplus of subnational government (States and Municipalities) has also been eroding, a reflection of the authorizations given by the Treasury since 2011 for increased borrowing by the States. For instance, the States and Municipalities posted a negligible 0.08% of GDP surplus during Jan-Nov 2014, down from 0.46% of GDP during Jan-Nov 2013.
It gets worse: the overall public sector fiscal deficit widened to a very high 5.82% of GDP (the highest fiscal deficit since September 2003) given the high 5.64% of GDP net interest bill and steady erosion of the primary fiscal surplus. Given the BRL depreciation during the month, the interest on the stock of Dollar swaps issued by the central bank reached R$8.7bn.
The steady decline of the public sector savings rate is leading to a wider current account deficit despite weaker growth and low investment. In fact, the twin fiscal and current account deficits are now tracking at a combined, very troublesome 9.9% of GDP, the worst picture in 15 years (since September 1999). Repairing the severely unbalanced macro picture demands a deep fiscal and quasi-fiscal adjustment and a significantly weaker BRL.
Last but not least, gross general government debt rose to 63.0% of GDP in October, up from 56.7% of GDP in 2013 and 53.4% of GDP in 2010 (and the highest level since October 2009).
To summarize, in Goldman's words
- The fiscal picture has deteriorated very significantly since 2011 at both the flow (fiscal deficit) and stock (gross public debt) levels.
- President Rousseff and Finance Minister designate Levy will face, among other things, the very significant challenge of repairing the severely deteriorated fiscal picture.
- The steady erosion of the fiscal stance pushed net and gross public debt up. Furthermore, fiscal and quasi-fiscal activism undermined the effectiveness of monetary policy, contributed to inflation very high and drove the current account deficit to a very high level despite weak growth.
In other words, after Japan, this is merely the latest Keynesian success story. And now BTFATH in the S&P 500 because the US will, any minute now, decouple from the entire world.
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No problem. JUst borrow from the new BRIC bank. Oh,wait......
Everything is fine in Brazil.
Come on in...the water is great!
Consider doing a little shopping and spend those USD when you visit. Brazil stores are safe as can be!
http://www.bbc.com/news/world-latin-america-27074277
We imploded some folks...
But Chinese workers produced a lot of fine solutions for modern living using raw materials from Brazil. I love to point out container ships in the bay to my toddler. Look cutie they are bringing more stuff from China to our Costco. It's a Goldie Locks situation.
new dated from april !! you fucking kidding me....
Brazil is the richest country n the world. Their economy is on steroids. Whoever wrote this article is an imbecile...
Well, at least they can look forward to making mountains of money on the Olympics.
Time to jump to ludicrous speed....
https://www.youtube.com/watch?v=ygE01sOhzz0
When Brasil's economy crashes will there be parties in the streets?
Not sure about the water, but the beaches look mighty fine
1.) Shark protection patrol.
2.) Blue light special on rubber bullets.
Doc Copper says it all:
http://finviz.com/futures_charts.ashx?t=HG&p=w1
An increase in government debt from 53% to 63% over four years seems ominous.
How does that compare to the increase in United States government debt over the same period?
From 68% in 2008 to over 103% in 2014
Interesting how all those countries challenging the USD hegemony are "imploding".
Always some pain while making a transition. Not saying it will be successful but when the perception of a better way is more deisrable then the current it will be attempted.
To crack some eggs, you gotta make an omelette, do you not?
Sometimes, people crack eggs just to crack eggs.
My point is that obviously the U.S. is pulling all stops economically to deter those countries from breaking away.
Cher frenchie, this is simply the result of bubbles popping, and those result from central planning, from which Brazil's biggest customer China suffers badly. The U.S. has less central planning (far too much, still, but less nevertheless) than China or Brazil or any of the sclerotic EUtopias like France. It's a bitch not being the USA, very often.
"It's a bitch not being the USA, very often."
Do not brag. Where would you be if the dollar wasn't the reserve currency, which allows America to make money out of the labor of others? And even then - when all it has to do is print - America has achieved building a colossal debt, so huge it is jeopardizing its future for generations. BTW, if it wasn't constantly raising its debt ceiling (something the other countries cannot do), it would have defaulted long ago.
Given the open-air loony bin America is, I thank the Lord every day I was not born American.
Yet another "controlled collapse" in order to protect the facade of a safe-haven.
Or losing planes.
If it was that important it would be on the news.......DUH
... interesting how all those countries challenging the USD hegemony are "imploding".
There is always the intriguing posibility of DEFAULTING on foreign debt, especially on the USD denominated one. It's how you turn tables against the TBTF. In a rigged game, you don't follow the rules...
When the world is forced to start taking one of two sides because of a dipshit's version of foreign policy, you only get access to 1/2 of the markets. This will get worse because Obama doesn't know any better.
Oh for shit sakes BREAK already!!!
I thought fiscal deficits and 100% debt/gdp were a good thing? Consume MOAR!
Yeah! Their Debt/GDP is a niggardly 63%?
Amateurs.
Japan is 250% ahead of them.
C'mon, get spending!!!
["My name is Paul Krugman, and I approve this message."]
+1 for working "niggardly" into a sentence (and for not being called a racist after doing it) :)!
Oh, they'll catch up sometime. That's what excessively democratic countries do. Demagogues gotta buy votes.
P/S you crack me up.
+1 for the comment as well as the avatar pic.
Brazil just reelected President Dildo Reject so all is good, sim?
Arrest Loyd Blankfein
Free Corzine
Corzine - Holder 2016
So the World Cup didn't help ???
Rio Olympics 2016 !!!
Good luck beating Germany.
No. On the contrary, during the Copa, for which all government offices, banks, the BOVESPA and factories closed repeatedly to watch grown men kicking a ball, commerce and production froze... hard. Ultimately, it was all to watch the national team get it's ass handed to it.... also hard. The Copa came on the heels of the summer holidays that were already extended de facto by a late Carnaval. In consequence, and in short, summing the many and diverse national, state, local and religous holidays in addition to the Copa event, but excluding the mandatory paid month off employed people take, Brasil was largely shut down for fucking-off for at least 3 months in 2014. AAnd they wonder why they are poor....An already weak situation was further trammeled by enedmic sloth in the country of the future.
Oh . . . . riiiight, it was the weather!
Numbers will improve with better weather!
Brazil can go to hell in my opinion. I was down in Argentina and wanting to visit Brazil in the very month Lehman collapsed in order to hook up with my friend who was coming in to Sao Paulo.
Bought a ticket to Brazil from Argentina to meet the friend in Sao Paulo. And the bitch travel agent in Argentina did not mention the reciprocity fee visa of $150.00 I would need to get into Brazil as a gringo. Checked out of my hotel in Argentina and got to the airport at like 5Am. A guy comes down the line and asks for my visa. I say I don't have one. he says you can't get on the flight and have to go back into town to the Brazil embassy to get the visa. So I go back into town check back into my hotel room and then go to the Brazilian embassy when they opened.
I get the pleasure of an interview with the Brazilian bitch from hell to ask for the visa. She immediately starts ranting about how I am a gringo and that YOU MUST PAY THIS FEE because your president (Bush at the time) charges us Brazilians a fee for visa so we charge you.
I sit back relaxed and say to her listen madam my name is not George Bush, I am not in favor of visa fees and simply want to go to your country and spend some money. So basically since your attitude is so nasty then fuck you and I will stay in Argentina and spend my money here. Best of luck. I did say fuck also which she did not appreciate but I loved it.
Due to the Lehman collapse their currency nosedived right after that. I was happy.
my friend from the EU just met me in Argentina and we had a grand old time. (taking 700$ from a kirchner owned casino in Buenos Aires putting my friend on the pass line on craps table and he hit some numbers straight. He had never rolled dice so I backed him on the pass line.
Wanted to go to the world cup this year to watch my team Costa Rica. (also USA) but once again what a hassle getting a visa and fees etc. So I said fuck it.
Wish I would have been able to go as Costa Rica rocked the world cup for their size but could not deal with the high prices the Brazilians charged for accommodations. Airbnb were total rip-offs.
Anyway sorry for the rant but am very happy to see Brazil nose dive. A bunch of assholes government wise. Not the people but the government yes.
Uai!
You need to see how Brazilians are treated by their country!
There Brazilian moving over 500 km (kilometers) to get a visa to the US.
Undergo a strange interview, must prove that has goods and having a steady job in Brazil.
Not sure if this has changed, I gave up visiting the US for the same reason that you have not visited Brazil.
If you do not like it, your problem.
Reciprocity is it.
Oh, if you were Argentina, Chile, Paraguay, Brazil, Uruguay, could cross borders only with your driver's license.
hehe.
Nah, their alright, tons of exports and China's breadbasket. Just a double wammy of low oil prices and strong US dollars. If the US dollar keeps getting even more strong then their will be pain for everyone including the US exports. Who can outlast who. But you are right its a BRIC war. Debt at 63% of GDP or US at 106% GDP. and then their is the Goldman, IMF, World bank terrorists to consider. Place your bets, I did.
I bet on Chinese loans. 1.4 billion chinamen like to eat
Silly me. I bet on Gold and Silver. (But at least smart enough to be physical)
Could you please take a moment and learn the difference between their, there and they're. It really would make your writing much more intelligible.
Thank you.
I learned the difference, I was just typing fast. A writing expert told me once that people like me, that color outside the lines tend disregard rules and sometimes get into trouble. I could not argue.
But, Thanks for the tip School marm.
My brother writes like that.
He is a retard.
You can tell from the writing.
Come on man, when people misuse their, there and the other one...it is not because you write quickly. Its because you are probably typing a in a second language. Take five minutes and write down the differences.
Nope. Graduated college near the top of my class and belong to an Honors Society. I am just an Outlaw.
Comformity is for you and the rest. And if your brother is a retard...............I used to think my brother was too, but come to find out he was off the charts.
The smartest man I've ever had the good fortune to have known had a 2nd grade education and could barely write.
Now get back to your lil spellin bee
Well, all words are made up.
Which Greek banks were long Brasil?
5% fiscal gap? lol. wake me up when they hit EU/US levels.
The bankers want their resources.
Many here on ZH have touted how the BRICS were the real power now in the economic world. How they would take down the dollar.
How Putin the chess player was set to destroy the dollar with the BRICS.
And just the opposite has happened. Russia (at least the common people) are in for more ecomonic hardship, Brazil is about to become a basket case and India is worried. The BRICS bank is a joke.
Cuba was a potential prize so the US offered to normalize relations, and Cuba took that offer and moved away from Putin. Argentina has been hit hard as has Venezuela - countries that have defied the US/dollar. Look out for Ecuador to be taken down.
I wish the facts were different but the jmafia is kicking Putin's butt and Putin is backing up to within the borders of Russia.
After all the Putin talk it has gotten to the point people are saying CHINA has Russia's back and the west better back off and leave poor Putin alone or China will get mad and do something. I think China will help Russia economically to some extent but will forment plans to take control of portions of Russia should it fall again. (If Russia falls the (western) jmafia intends to throughly destroy it this time.)
I think most expected this final volley from the jmafia. The incumbents always look the stronger side at the start of a war - controlling the propaganda.
The oil/commodity nations must pay the price for 10-15 years of false, credit driven growth for which they were also complicit.
Things may be just as bad here if not worse, but you have a corrupt media just constantly telling you that life in Disneyland is grand as the govt pulls numbers out of its ass and the financial markets are manipulated. The dream may come suddenly crashing down when a local shop owner somewhere in the world waves his hand and says 'no dollars' to some local tourists trying to pay for a rug and hence the butterfly effect kicks in.
I can only see that (shopkeeper refusal) happening after an outright US debt default. Thanks to the end of QE, they will become more desperate for gringo dollars. The tide is going out.
Its not over yet stumpy...
I agree with you that it seems like the BRICS are having it rough, however they should all know who is responsible for the pain they feel, and that bad feeling they have will last alot longer than the dip in their economies. Anyway, its gonna be all change when yellen fires up the printers for qe4 and the dollar nosedives, coz i really cannot see how they can raise rates. GDP of 5% has to be a fudged number.
You are right, China will pay Russia lipservice but will side with the USA should there be a hot war. They have too many dollars to lose to side with Russia. Let's not forget they invaded Russia before and have a history of invading border neighbors. China also would love to get its hands on Russian oil instead of paying for it.
However, history has shown Russia to be extremely resiliant to invasion. It's hard to imagine their total break-up but that does appear to be the plan.
And we break down into regions shorty thereafter.
There will be the regions with radiation. And the regions without.
China would rather eat cheese for dinner (which they don't like) than side with the round-eyes. The round-eyes shoved opium down their peoples throats and the Russians are their energy providers (especially when the Saudis run out). And they are converting their $s to hard assets as fast as they can. Just ask Chinese people what they really think of Anglo-Saxon types and you feel find out what they think of them.
I thought they loved us and that's why they worked so hard to make cheap shit for us to buy on credit. Are you telling me they DON'T think I deserve a higher standard of living than them?
"Look out for Ecuador to be taken down."
Ecuador's national currency is the US dollar. Has been since 2000. So, how do you take them down? Not by attacking their currency, that's for sure.
They are ending that.
http://newsbtc.com/2014/12/28/registration-begins-ecuadors-government-crypto-currency/
Why you wanna add Ecuador, they deal in U.S. Dollars. That is their currency. They dont belong to BRICS. So why them ? The chess game as you call it, is in the early stages. We have a Republican Senate and Congress coming back to washington. With the heads of most committees being from texas. Have you been listening to any of these scholars speak. They'll do something STUPID and fuck things up, I'm sure of it. No sir, the world will not allow the U.S. to pass it's debt onto them yet again, not this time.
Ecuador has not played along with the US in international politics. Such as offering Assange asylum. Ecuador has also been openly friendly with Russia and there was even talk (rumors) of Russia having formal trade agreements with Ecuador.
A country such as the US does not have to use attacks on a small nations currency to destroy its ecomomy. A little bit of covert war using "rebel or narco" forces based in a neighboring country will do much economic damage. Simply making Ecuador appear to no longer be a safe country to visit would be a blow.
Ecuador is going no where. Raphael has a good heart but no grain on how to grow an economy. Ecuador is just another Venezuela. Without the hot women.
Very wishful thinking.
Seems people forget that during any major war, economics goes out the window. Russia faced far worst than this both in 1998 and 2008/9. You people never fase to amuse me with your beliefs. Just as a wake up reminder, Russia would use Nukes, and has plenty more of them than China, and is a far more spread out country than China is. If you dont believe they will use them, they would if the future of her country is in peril. Yes, I would know.
Your observations are correct, but that is the situation today. However, it needs to be pointed out that in the long run it would appear the "Western mafia" is not sustainable with the level of debt they have accrued. All of the BRICS countries do have major problems of their own, yet they hold the long-term advantage in terms of real assets and low levels of debt. I think this is actually the reason why the West has been in such a panic mode lately with Russia etc., I smell desperation on their part.. and actually it's not in the interest of the West for Russia to fall into China's hands since that would essentially mean a single superpower that has no equal.. I cannot quite figure out why the West pushes Russia away from Europe into China, this is really idiotic even from their own perspective..
zackly!!!
.All the charts are showing money printed and lent. And also commodities sold in dollars.
The world is already moving away from this.
A lot of sales are being conducted by barter arrangements and local currencies. They are not reflected in western economic data.
Just recently russia arranged for lease of fighter jets to Argentina in return for Agro products.
So don't assume Russians are starving because they buy less Agro products in US dollars.
Put up a chart of Corruption and you will see a moon shot......the harder they fall..the faster they steal....and all those new cars and condos that were built and bought with debt....oh oh....they have had so much price appreciation the last 5 years..they need some takeback...prices have gone up 4-5 times in real estate....that can fall a little I think....and Hookers are way more expensive than they used to be....and the Real can go to 5 to 1 to the USD....that is what it was at when I was buying there...
The Real was never at 5. (Try 4)
White woman, shoots at random people, aims gun at cops after car chase, lives to tell about it
Cops discriminate against males. Duh.
Cops discriminate against males. Duh.
I'm really suprised that a government would spend more money than it takes in.
I'm just surprised they don't do a better job of lying about it.
Gabriel Medina, a 20 year old Brazilian national, just won the 2014 ASP Mens World Championship Tour title, the first Brazilian ever to do so...besting Fanning, Slater, Parko, and the rest of the tour vets.
The Brazil economy will always be a joke so long as every grom aspires to be a pro footballer or surfer
Honestly, who gives a shit thou? Their beer is cold, their waves are good, their chicks are smokin hot..
I love Brasil. But...getting things done here take 10 times as long as in the USA. Most everything fabricated in brasil sports poor design, inferior materials, sloppy fabrication and super expensive distribution. I need to fix everything I buy. Getting something delivered, especially imported from out of country, is hit or miss. Things simply disappear in the mail system. Prescription glasses: no show. So it's not theft, just that beguiling fun spirit of Brasil and zero accountability. Items that do show up carry a very hefty import charge, about double the value of the goods...if they make it through customs at all. So the local manugfacturers are protected from foreign competition...resulting in a lazy attitude that produces mostly junk.
I wanted to order a $10 item from Sao Paulo via internet. Cost of shipping to Brasilia: $200-300.!!!
Brasil has had many currencies and one can buy buckets of cruzeiros and other prior fiats at the fairs. The Real fell some 60% in three years and is headed...into the buckets at the fair.
The bureaucrats live large while the folks scrape by. The roads are OK here in the new capital city, owning a car is three times more expensive than the US, and the bus system of overwhelmed and under funded.
But the people are wonderful, the language is a lovely song and the tropics pleasant.
Outstanding post, Spark...have had the same experince there. Lots of 'friction' in that economy that's just there from "tradition".
De-coupling in effect or maybe the positive effect of having the Olympics.
Yeah, it will be like the '40 games in London. Those were some memorable games,.
When Brazil hosts the 2016 Summer Olympics, perhaps they will put the kiss of death to that commercialized, bloated piece of crap known as the Olympics...I can surely live without it...
IOC was forced to move the 1976 winter games from Denver to Innsbruck, so it wouldn't be the first time.
Moving Brazil's games to Greec would be most excellent. LMAO!!!
And, just think -- only 4 years after that success story, we get to have a glow-in-the-dark Olympics in Tokyo! Think of the savings on energy costs. Spending on electricity for lights will go down, as half of the competitors will glow in the dark ...
... if there are still people living in Tokyo in 5 1/2 years ...
or, perhaps that should be said thusly:
... if there are still people “living” in Tokyo in 5 1/2 years ...
Postscript: Fukushima is approximately 128 nautical miles north of Tokyo.And some interesting trivia, as an aside -- did you know that Chernobyl is not actually [yet?] in Russia -- but is in fact in northern Ukraine?
She's a BRIC...House!
Is she letting it all hang out (yet)?
Brazil is one of the world's major high quality raw iron ore miners and shippers. Iron ore produced in Brazil is some of the cheapest and highest raw quality in the world. Needing no processing, but being furnace ready. Iron ore has dropped 50% in recent months, tearing the guts out of Brazilian Miners. But, in order to beat their rivals, Brazil is maintaining full production of raw Iron Ore in a bid to destroy competitors in America and Austrailia. The West Australian Government is now over 1.2 billion short in it's budget due to collapse of tax revenue from Iron Ore Mininers there. Nobody in government knows what to do, as all the government employees there make great wages and benefits and government is loath to fire anyone! So crisis is now in the air.
Brazil, like Saudi Arabia. hopes to use this price collapse to destroy higher priced producers. Like the mines and processing plants that dot my part of Minnesota. I expect big layoffs here soon. With our mines being high cost producers, it is logical steel makers will turn to cheap Brazilian Iron ore. Time will tell, but I expect our local economy to be smashed!
I guess this is a financial bikini wax everyone has been talking about
I cannot help but think about Greece and their Olympics that basically dragged the whole country down... now Brazil is hosting both the World Cup and the Olympics... incidentally Russia is in the same boat with the Olympics and the World Cup...
Yea, the Olympics appear to be a contrary indicator alerting us to localized, bankster-created, debt bubbles. Banksters probably commence selling at the 'Olympic peak'.
LONG BRICS.
LMFAO.
Brazil is driven by crops and have spent an insane amount in infrastructure works.
The 2014 harvest was not good, the drought hurt a lot.
The world cup hurt production, agree.
The fall in oil and steel prices also but wait 2015.
There are many agreements Yuan / Real, much of which does not appear in the statistics in US $.
Much of the agricultural and livestock production (mainly) will go to Russia - much cheaper than importing from EU.
There is much more to say, especially when one considers the MERCOSUR and the BRICS.
:-)
I blame a bad batch of feijoida.
The Olympic Summer Games should be moved to Greece and then stay there. It would cut the cost of the games and give Greece two industries for its economy. (tourism and the Olympics every four years.)
Financial warfare first. Fireworks 2nd. Same shit everytime. My as well get on to the good stuff. And who are the stupid fucks that couldn't see ahead that Russia and China would join forces?
Wow! I remember not to long ago how everyone in the lame stream media was talking about how we all need to learn a lesson from Brazil and do what they do economically. Well I guess we did! LOL